Fake Reviews - Your Reputation Budget is at RISK

"Also, beware of the fake reviews. There's a lot of fake 5-star reviews that all sound alike and were all posted within a week of each other. Scummy practice by a scummy company." - Property Review

Yes, the above review is genuine; it is not FAKE. Unfortunately, with each passing day, we are seeing such sentiments echoed more often in multifamily online reviews.

FTC bans fake reviews and testimonials –50K + in penalty per violation.

On August 14, 2024, the Federal Trade Commission issued its final rule ‘banning’ fake reviews and testimonials. The rule will allow the FTC to strengthen enforcement, seek civil penalties against violators, and deter AI-generated fake reviews. With this final rule, the FTC aims to protect consumers by saving them from online reviews generated by bogus and manipulative practices and creating healthy competition among businesses based on lawful marketing practices.

FTC’s rule prohibits the following*:

a) Fake or False Consumer Reviews, Consumer Testimonials, and Celebrity Testimonials - It bans businesses from creating reviews that are AI-generated or reviews from people who have not had a real interaction with the company.

b) Buying Positive or Negative Reviews - Companies cannot offer compensation or incentives for writing reviews that express a specific sentiment, regardless of whether positive or negative.

c) Insider Reviews and Consumer Testimonials - It mandates clear disclosure of any material connections when insiders give reviews, particularly prohibiting testimonials from company officers and managers without proper disclosure.

d) Company-Controlled Review Websites - Businesses cannot falsely claim that websites controlled by them provide independent reviews of their products or services.

e) Review Suppression - It prohibits businesses from using intimidation or legal threats to suppress negative reviews. Additionally, businesses must not misrepresent reviews by hiding negative feedback while promoting only positive ones.

f) Misuse of Fake Social Media Indicators - It bans the buying or selling of fake social media indicators such as followers or views generated manipulatively, if the buyer is aware of their misrepresentation.

*This is a summary; for complete details, visit FTC.

Under this rule, the FTC can penalize you for fake reviews and endorsements with fines upwards of $50,000 per violation. Issued on August 14, the rule will become effective on October 13, 60 days after the date it is published in the Federal Register.

Alarming rise in deceptive online reviews

As the authority in online reputation management and the pioneer of the Online Reputation Assessment (ORA)score, J Turner Research has closely followed the trajectory of online reviews in multifamily for over 16 years. For a decade, we have been publishing the Mechanic of Online Review Sites and ILSs, the only comprehensive resource on the growth of multifamily online reviews. Today, J Turner Research monitors the reviews and ratings of over 143,000 multifamily properties across 20+ review sites.

Over the years, we have seen an explosion in deceptive review generation practices signaling that as an industry we are losing sight of our raison d'etre — creating genuinely positive resident experiences. The latest ruling by the FTC will potentially compel the industry to practice the basics.

"When there are tangible consequences such as hefty fines, companies will be forced to closely monitor and scrutinize their review generation tactics and hold their teams accountable." -Nicole Patterson, Director of Training and Business Analytics Consulting, J Turner Research.

FTC’s ruling boosts the accuracy of ORA Scores

Joseph Batdorf, President of J Turner Research, offered his insights on the new guidelines and expressed that J Turner and consumers in general are increasingly adept at sniffing out fake reviews.

“Our ORA algorithm is farsighted as we anticipated this explosion of fake reviews. The ORA algorithm takes discrepancies between various review sites into account, and it handicaps review sites with extremely positive or negative sentiment for a property compared to other review sites,” shared Batdorf.

Batdorf added, “We welcome the opportunity to encourage multifamily marketers to focus on genuine and trustworthy reviews and ratings for apartment properties on the Internet. With the latest ban on fake reviews, FTC’s aims to promote fair, honest, and competitive markets. This will help boost the accuracy of the ORA scores further and make the search for a new apartment home a more productive experience based on legitimate resident feedback.”

He acknowledges that it is hard work to have satisfied residents, so having legitimate reviews that acknowledge outstanding customer service is important and a true indicator of an operator’s commitment to nurturing exceptional resident experiences.

Tips to protect your reputation

1. Strictly monitor your review generation process and train your teams to spot deceptive review generation patterns. Guideline to spot fake reviews:

a) When a property has a high volume of five-star reviews with almost word-to-word narratives on a single day,

b) When the review narrative compliments a staff member repeatedly in multiple reviews on a given day.

c) When the reviewer names seem like they are variations of one name.

It is not just us; residents are also smart enough to filter fake reviews and leave comments questioning the legitimacy of the positive reviews for a property on a review site.

“Many of the five-star reviews are made by Smurf accounts put up by an image management company or the management themselves. The complex is currently fishing for reviews (they have a raffle going on with the price of a ticket being a five-star review left for the property), so I would not trust any from this week.” - Property Review

2. Discourage your teams from leaving reviews for your property without clearly indicating that they work there.

3. Because you are working with a third party does not mean you are absolved from any liability. You are liable for the reviews generated for your property and company.

4. Be wary of reputation management vendors who indulge in review gating, where they treat residents who leave a lower sentiment review differently than the ones who leave a higher sentiment review for your property.

5. Focus on understanding your renter experiences by adopting resident and prospect surveys as a critical part of your property management. And don’t forget employee surveys because if your employees are unhappy, your residents will not be happy.

a. Use resident and prospect feedback to identify operational gaps and systemic issues at your property.

b. Make a review push campaign available to all residents and not just the satisfied ones.

“The FTC Ruling is not a surprise; J Turner Research has always encouraged review feedback to be genuine and accurate, and that is why we rely so heavily on prospect surveys and on the Turner Apartment Loyalty Index Scores based on resident surveys to have a thorough understanding of the renter experience,” shared Patterson.

Once you fix the operational issues, HONEST positive reviews will follow, and negative reviews will slow down automatically. Remember, there is no substitute for good old kind, compassionate, communicative, timely, and respectful resident service!